- 20 -
1991 Federal income tax return and under section 6651(f) for
fraudulently failing to file Federal income tax returns for 1992
and 1993.
Respondent has the burden of proving fraud by clear and
convincing evidence. Sec. 7454(a); Rule 142(b); Parks v.
Commissioner, 94 T.C. 654, 660 (1990). Respondent must prove by
clear and convincing evidence (1) that petitioners underpaid
their taxes in each year and (2) that petitioners intended to
evade taxes by conduct intended to conceal, mislead, or otherwise
prevent tax collection. Parks v. Commissioner, supra at 660-661.
I. Underpayment of Tax
First, respondent must prove by clear and convincing
evidence the existence of an underpayment of tax for each of the
years at issue. For fraud purposes, respondent may not rely upon
petitioners' failure to carry the burden of proof as to the
underlying deficiency. Id.; Petzoldt v. Commissioner, 92 T.C.
661, 700 (1989); Estate of Beck v. Commissioner, 56 T.C. 297, 363
(1971).
Respondent asserts that, using the bank deposits and cash
expenditures method, Beck's Liquors underpaid its tax by
$44,274.16 in 1991, $23,047.49 in 1992, and $37,064.66 in 1993.
Respondent asserts that Mr. Beck received constructive dividends
from Beck's Liquors in each of the years at issue, and, as a
result, Mr. Beck underpaid his taxes in 1991, 1992, and 1993,
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011